GM expects to save $2 billion by consolidating its global marketing and advertising agencies

Article by Christian A., on March 23, 2012

General Motors forecasts that over the next five years, it will be able to have savings of $2 billion by sharply consolidating its global marketing and advertising agencies. GM is expected to make an announcement within the next few days about doing away with its practice of having dozens of smaller firms handle advertising for Chevrolet around the world.

Instead, just a few major agencies will manage almost all of Chevrolet creative ad duties. This is included in a wider effort started in January that had GM give majority of its $3 billion media-buying and planning activities to just one firm -- Aegis Group's Carat unit of London.

With this move, dozens of agencies got the boot. A spokesman said that GM's global marketing chief Joel Ewanick believes that streamlining the Chevy ad work and GM's media-planning budget will save around $2 billion for the automaker in more than 5 years. On average, this amount would stand for $400 million, which is around 10% of GM's annual advertising budget.

According to GM’s annual report filed last month, GM's global advertising expenses increased by 5% to $4.48 billion in 2011. However, not all of the savings from the consolidation will affect the bottom line.

The spokesman said that some will be pushed back to the marketing budget however he didn’t say if GM would increase spending, says Autonews. Creative work for Chevrolet throughout the globe is handled by over 50 ad agencies and more than 2,000 employees at outside firms.

Last January, Ewanick said that he hoped to reduce this figure to less than five agencies to cut costs and align Chevy's marketing throughout regions. Ewanick told Automotive News last year that instead of having a hodgepodge of regional divisions, he wants GM's marketing arm to work as one unit. He said that expenses will be reduced and Chevy's message will be enhanced when budgets are merged and when ideas are borrowed across regions.

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